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Launch IMF WEO January update: Subdued Demand, Diminished Prospects

The pickup in global economic activity in 2016 and 2017 will be more gradual than expected at the end of 2015. This prognosis was presented at CEPS on January 20th by Gian Maria Milesi-Ferretti, Deputy Research Director of the research department at the IMF, based on the IMF’s World Economic Outlook update. This adjustment is mostly due to revised downward projections in emerging markets and developing economies driven by the rebalancing of the Chinese economy and falling commodity prices. In advanced economies, the recovery is projected to continue in a gradual fashion. However, the generalised slowdown in emerging-market economies combined with the gradual exit from extraordinarily accommodative monetary conditions in the United States could represent an important source of downside risks, which could derail global growth. These key messages were broadly endorsed by Simon Kirby, head of Macroeconomic Modelling and Forecasting at the National Institute of Economic and Social Research (NIESR) in the UK, leaving limited room for an optimistic outlook.